El Segundo Again Places Utility Tax Up for Vote

Two months after El Segundo voters overwhelmingly defeated a ballot measure that would have imposed a utility user’s tax, council members on Tuesday voted to place the matter on the ballot again April 12.

Faced with a $1-million budget deficit this year, council members voted 4 to 1 to ask residents to approve a 2% utility user’s tax that would be levied only on industry. The measure voted down last November would have imposed a 4% tax on both businesses and residents.

Council members, several of whom expressed concern about the fairness of singling out business to solve the city’s fiscal woes, indicated that they would soon consider charging residents a trash collection fee. Councilman Keith Schuldt predicted that there would be enough support among council members to impose such a fee.

“Unfortunately, somebody has got to pay the bills,” Schuldt said in an interview on Wednesday. “The money has to come from somewhere. Just because the residents didn’t choose to vote for the utility tax before doesn’t mean our bills are going to go away.”

While the utility user’s tax must be approved by a majority of the voters, only a majority of council members is needed to levy a trash fee.

The only councilman opposed to the utility user’s tax measure, Carl Jacobson, told council members on Tuesday that he believes it is too low and would not be in effect long enough. The tax would expire in three years unless voters approved it again.

Jacobson also said that by asking voters to pass a utility user’s tax, the council is morally obligated to impose a trash collection fee on residents, which he opposes.

Jacobson was alluding to a December proposal by the El Segundo Chamber of Commerce supporting the tax but saying that it should be accompanied by a residential trash fee. Business long has paid for trash collection.

Several El Segundo officials said that preliminary figures indicate that the trash fee would be about $60 a year for a single-family household if the city seeks to make the service self-sufficient. City officials previously estimated that residents would pay about the same amount each year if a 4% utility user’s tax was in effect.

Ever since sales-tax revenues plummeted when the local Chevron refinery lost a major contract, El Segundo officials have been scrambling to find new revenue sources. As a result, the council has imposed two new taxes on business in the past three years. Besides Chevron, the city is home to such major companies as Hughes Aircraft, Rockwell International and Xerox.

Several other South Bay cities, including Torrance, Manhattan Beach and Gardena, already have utility taxes that apply to all users. The rates range from 6% to 8%, according to El Segundo Finance Director Jose Sanchez. Los Angeles has a 10% tax.

Sanchez said a 2% utility user’s tax on business would bring El Segundo about $2 million annually.

The city expects to wind up with a $1-million deficit for the 1987-88 fiscal year--a figure that would be higher except that cutbacks have been made in some areas and spending deferred in others, he said. The shortfall will be made up with reserve funds.